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SOUTH CAROLINA COMMUNITY ASSOCIATION COLLECTIONS GUIDE

South Carolina Community Association Collections Guide: Get answers to your questions about South Carolina HOA Collection Laws

Welcome to South Carolina

With nearly 7,000 condos, HOAs, and co-ops, the state of South Carolina has a massive number of common interest realty associations in the country. According to CAI, an estimated 1.33 million South Carolina residents live in a community association today.

South Carolina’s community association laws apply to all common interest communities created on and after January 1st, 1994. Communities created before that must adopt any regulations from the act. Any bylaws or declarations from older communities that contradict the regulations expressed within the South Carolina Homeowners Association Act are now void and must adapt to current regulations.

By 2040 it is expected that the community association housing model will become the most common form of housing in South Carolina. The median home value in South Carolina is $154,800. Homes in community associations are generally valued at least 4%* more than other homes.

Before you read anything on this page about the laws governing Condo and HOA collections in South Carolina, make sure you have read the governing documents for your association. The governing documents may be stricter than the state laws, and in those cases, the governing documents take precedence.

As a general rule, neither your management company nor board members should attempt to make contact with delinquent homeowners in an attempt to collect the debt, beyond the initial courtesy letters. You need an attorney or a licensed collection agency to collect on your behalf.

Legal Reference Links

FAIR DEBT COLLECTION PRACTICES ACT (FDCPA)

South Carolina Homeowners Association Act

South Carolina Horizontal Property Act

South Carolina Code of Laws

South Carolina Consumer Protection Code

South Carolina Nonprofit Corporation Act of 1994

South Carolina Fair Housing Law

Other Federal Laws

How to improce HOA delinquencies

How to Reduce Your Condo/HOA Delinquency Rate

Are you living with the Consequences of nonpaying homeowners? If so, you need a better approach to collections for your community association!

This guide will will give you the same techniques that we use to help our clients reduce delinquencies, all but eliminate bad debt write-offs, and see significant savings on legal fees.

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Disclaimer: The information provided on this page is for general informational purposes only and does not constitute legal advice. Axela is a technology provider and is not a debt collector. Laws and procedures may change and may vary depending on the specific circumstances. This information should not be relied upon as a substitute for advice from qualified legal counsel. Users should consult an attorney regarding applicable laws and compliance requirements.

State Collection Laws for HOAs & Condos

Yes. Foreclosure should be the last desperate attempt to recover the association’s money. An HOA should consider a merit-based collection agency to recover its delinquent money before moving to put people out of their homes. Notices should be given to a delinquent before any action is taken.
If the file has not gone to the attorney it is advisable to contact the manager or treasurer of the association to get a copy of the delinquent ledger. Then review the ledger and if you can prove that you made payments that were not applied properly, advise the management company. If the file has been sent to a collection agency the law requires that the collection agency give the debtor 30 days to dispute the debt.
There is nothing in the statutes that limit the amount of late fees or late interest that can be charged.  One must look to the governing documents to see if the association can charge late fees. Regarding late interest, if the governing documents are silent the association can charge the maximum allowed by law which is 8.75%. If the governing documents prescribe a late interest rate then that is the maximum an HOA or Condo can charge, provided it does not exceed 8.75% per annum.
Yes. The South Carolina Consumer Protection Code regulates the conduct of debt collectors at the state level and contains provisions similar to the Fair Debt Collection Practices Act (FDCPA). The Act prohibits debt collectors from using abusive, unfair, or deceptive practices when attempting to collect a debt. HOA fees are considered “debts” under the FDCPA, and homeowners are protected “consumers.”
Yes. South Carolina does not differentiate between an in-state and out-of-state owner from a collections perspective.
3 years. The statute of limitations periods for HOA claims are different for every state. In South Carolina, consumer debt such as HOA & Condo fees have a statute of limitations of 3 years. These periods often range typically somewhere between two and six years. In South Carolina, implied contracts, not under seal, have a statute of limitations of three years. Contracts under seal have a statute of limitations of 10 years. South Carolina Code of Laws.
Yes. The board of directors has a fiduciary duty to collect these assessments and if the individual is not in bankruptcy there is nothing legally stopping them from the collection of delinquent assessments.
The best way to handle collections for HOAs is to engage the owners and be armed with all the information you can acquire. Know the equity in the unit, read and understand the governing documents, find out where the owner is, and then begin to engage in the collection efforts. Once again, this is a very heavily regulated industry so this should be done by professional and licensed companies. Once you engage with an owner, you may be surprised to see that most of them will cooperate and come to the table. You just have to ask them and be willing to work with them.
The traditional way to collect is to have the management company send a few courtesy letters to a delinquent owner and then send the file to the attorney for foreclosure. South Carolina is a Judicial Foreclosure state and the process can be long and expensive.
Yes, South Carolina has state laws pertaining to HOA and condo associations. To better understand the laws for South Carolina HOAs, please refer to:
  • South Carolina Homeowners Association Act – § 27-30-110. The statute imposes disclosure requirements on homeowners associations and creates the Department of Consumer Affairs Services for Homeowners and Homeowners Associations.
South Carolina Horizontal Property Act – § 27-31-210. These statutes govern the formation, management, powers, and operation of all common interest communities.
It depends. Because South Carolina is not a super lien state, a bank foreclosure will take priority over a community association’s lien and does not require the lender to provide any compensation to the association for unpaid assessments. So, if both a mortgage-holder and a community association are foreclosing on a property, chances are often slim that the HOA will be able to collect. This is because there is often no money leftover for the HOA to collect on their debts once a bank has been paid using the sale funds. However, Axela clients are able to take advantage of a service that tracks bank foreclosures through to sale. Once the sale has concluded, Axela can petition on behalf of the association to have first access to any excess funds left over after the mortgage lender has collected.
Yes. Once a property has gone through probate and the court has decided who is the legal owner, all the past due fees are due and payable to the HOA unless the governing documents have a provision that says the debt rolls over to the association. Going forward, after probate has been settled, the new owner must pay their fair share.
An association should always contact a delinquent owner to advise them regarding what is owed. Every owner is entitled to see their ledger and know how much they are owed. An owner may request their ledger at any time and an HOA should be willing and able to provide it to them. An association that publicly publicizes information about a homeowner’s unpaid assessments potentially violates the federal Fair Debt Collections Practices Act which forbids disclosure of information to third parties relating to a debt (which includes HOA assessments).
South Carolina laws place no restrictions on what you can do with the money your association collects in past-due assessments. As long as the money is accounted for in the budget, aligns with the governing documents, and/or is approved by the board of directors it can be spent on any improvements or maintenance that is required by the association.
An HOA can collect as much as is legally owed to them in fees, violations, special assessments, administrative costs, and legal fees.
No, but that does not mean that a management company cannot be in violation of the collection statutes. Collections are heavily regulated and anybody who attempts to collect debts should know what they are doing.
In addition to the Federal Fair Debt Collection Practices Act (FDCPA) statutes, South Carolina has its own laws regarding collections. The statutes codified in the South Carolina Consumer Protection Code are similar to the FDCPA in many respects, but broadens some definitions of terms and people.

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Axela’s technology increases recovery times. On average, using our collections tools results in money in your community’s account within 67 days of the assessments becoming delinquent.

FREE COLLECTIONS ANALYSIS

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